The state government says it will establish a $15 million Farmers Drought Fund, which includes payments for farming families and grants for on-farm drought preparedness.

“It won't make it rain, no drought package can do that,” Premier Daniel Andrews said.

“But it is about targeted practical support both for the short term, for those who are doing it tough right now, and also from a businesses’ point of view, trying to adapt to what is a changing climate.”

Mr Andrews rejected calls for new dams.

“Dams don't make it rain — there are a number of water infrastructure projects that are worthy and important,” he said.

“We should get on with them, not be diverted into silly political debates — instead provide real support to those who are doing it tough.”